Bank of America Corp (NYSE:BAC) — On July 14, I reviewed BAC stock with the recommendation to buy at $13 with a trading target of $15.15. BAC jumped to a high of $16.24 on August 31 and yesterday closed at $15.63.
This mega-bank is the second-largest U.S.-based financial holding company with assets of over $2.2 trillion. On August 30, Standard & Poor’s reiterated their “4-star buy” on Bank of America, increased their 12-month target price to $18 and raised their 2016 earnings per share estimate a penny to $1.27.
They also increased their 2017 EPS to $1.43 from $1.40 and noted that BAC, along with other large banks, will immediately benefit from a rise in short-term interest rates. Rates are expected to be raised before the end of this year, and S&P’s recommendation is based on valuation and steady, but unspectacular, improvements.
Merrill Lynch is expected to be “split-off” shortly, cutting the expenses associated with the subsidiary.
BAC met my target and is still in a downtrend illustrated by the “Bearish Resistance Line” at about $16. However, for those investors who bought this stock at $13, I suggest that they continue to hold. After turning down from the line at $16, Bank of America flashed a buy signal from my internal indicator, the CBR, on Monday and a Golden Cross (long-term buy signal) last week.
Immediate support is at a triple top at $15.25.
Traders with no position: Buy Bank of America at $15.50 with a trading target of $18 for a trading objective of 16%-plus, and investors should consider buying BAC at the market for long-term representation in the bank sector.
